steel industry

steel industry

steel industry, the business of processing iron ore into steel, which in its simplest form is an iron-carbon alloy, and in some cases, turning that metal into partially finished products or recycling scrap metal into steel. The steel industry grew out of the need for stronger and more easily produced metals. Technological advances in steelmaking during the last half of the 19th cent. played a key role in creating modern economies dependent on rails, automobiles, girders, bridges, and a variety of other steel products.

Iron working can be traced as far back as 3,500 B.C. in Armenia. The Bessemer process, created independently by Henry Bessemer in England and William Kelly in the United States during the 1850s, allowed the mass production of low-cost steel; the open-hearth process, first introduced in the United States in 1888, made it easier to use domestic iron ores. By the 1880s, the growing demand for steel rails made the United States the world's largest producer. The open-hearth process dominated the steel industry between 1910 and 1960, when it converted to the basic-oxygen process, which produces steel faster, and the electric-arc furnace process, which makes it easier to produce alloys such as stainless steel and to recycle scrap steel.

After World War II, the U.S. steel industry faced increased competition from Japanese and European producers, who rebuilt and modernized their industries. Later, many Third World countries, such as Brazil, built their own steel industries, and large U.S. steelmakers faced increased competition from smaller, nonunion mills ("mini-mills") that recycle scrap steel. The U.S. produced about half of the world's steel in 1945; in 1999 it was the second largest producer, with 12% of the world market, behind China and ahead of Japan and Russia.

Since the 1970s, growing competition and the increasing availability of alternative materials, such as plastic, slowed steel industry growth; employment in the U.S. steel industry dropped from 2.5 million in 1974 to to less than a million in 1998. Global production stood at 773 million tons in 1997, down from 786 million tons in 1988. U.S. steel production has remained constant since the 1970s at about 100 million tons, but 50% of that total is now produced by mini-mill companies. An increase in U.S. demand during the 1990s was largely met by imports, which now account for from about a fifth to a quarter of all steel used annually in the United States. The old-line U.S. steelmakers, losing market share and with higher wage, health, and retirement costs, experienced a string of bankruptcies beginning in the late 1990s, leading to industry and union pressure for protective tariffs, which were imposed by President George W. Bush in 2002 on most steel from non-NAFTA industrialized nations. Later reduced, the tariffs were found in 2003 to be illegal under World Trade Organization rules, and President Bush reversed the tariffs.

See W. Hogan, The Economic History of Iron and Steel in the United States (4 vol., 1971); R. Hudson, The International Steel Industry (1989); C. Moore, Steelmaking (1991); R. S. Ahlbrandt, R. J. Fruehan, and F. Gairratani, The Renaissance of American Steel (1996).

The global steel industry has been going through major changes since 1970. China has emerged as a major producer and consumer, as has India to a lesser extent. Consolidation has been rapid in Europe.

Material for development and war

The volume of steel consumed has been the barometer for measuring development and economic progress. Whether it is construction or industrial goods, steel is the basic raw material. Lighter metals and stronger alloys have been developed, plastics and synthetics have replaced steel in many areas.

Steel is made from ores still found in abundance around the world. Technological developments have brought down the time for transformation from iron ore to steel to within a day. Even after decades of use, it can be sent back to the furnaces as scrap, melted and remade into new qualities of steel. It is the most recycled material in the world. In developed countries, recycling accounts for almost half of the steel produced.

Another major feature is the continuous improvement of steel grades. Half of today’s steel grades were not available ten years ago. Just take the example of the most commonly used steel – rods or bars, used as reinforcement material with cement concrete. It used to be plain bars even in the sixties, then came the ribbed bars, followed by the cold twisted deformed bars and now it is thermo mechanically treated bars. Each development has added to the strength of construction. Older varieties of steel have been improved upon and newer grades introduced. The process continues.

Growth of the industry

Global steel production grew enormously in the 20th century from a mere 28 million tonnes at the beginning of the century to 781 million tonnes at the end. (For elaboration see .)That was the period when the steel industry developed in Western Europe and the USA followed by the Soviet Union, Eastern Europe and Japan. However, steel consumption in the developed countries has reached a high stable level and growth has tapered off.

After being in the focus in the developed world for more than a century, attention has now shifted to the developing regions. In the West, steel is referred to as a sunset industry. In the developing countries, the sun is still rising, for most it is only a dawn. Towards the end of the last century, growth of steel production was in the developing countries such as China, Brazil and India, as well as newly developed South Korea. Steel production and consumption grew steadily in China in the initial years but later it picked up momentum and the closing years of the century saw it racing ahead of the rest of the world. China produced 220.1 million tonnes in 2003, 272.2 million tonnes in 2004 and 349.36 million tonnes in 2005. That is much above the production in 2005 of Japan at 112.47 million tonnes, the USA at 93.90 million tonnes and Russia at 66.15 million tonnes. For details of country-wise steel production see Steel production by country.

Growth potential of the industry

Growth of the Chinese steel industry appears to be staggering. However, when one considers that China has a population of 1.3 billion, the per capita steel consumption is around or below that of the developed countries. Indeed, while China has been progressively raising steel production for many years, it has also been importing substantial quantities of steel. It is only now that China has become a net exporter of steel. This indirectly means that China has also reached a level of production saturation and its steel industry is more likely to witness more of consolidation and reorganisation in coming years rather than any major expansion of its assets.

Amongst the other newly steel-producing countries, South Korea has stabilised at around 46-48 million tonnes, and Brazil at around 30 plus million tonnes. This brings the focus of the industry to India. Considering a steel consumption of 300 kg per man per year to be a fair level of economic development, India will have to come up to somewhere around 300 million tonnes, if it is to fulfil its ambitions of being a developed country. That of course is a long journey from the present production level of around of around 50 million tonnes but one must consider its past before coming to a conclusion about its potential. India was producing only around a million tonnes of steel at the time of its independence in 1947. By 1991, when the economy was opened up steel production grew to around 14 million tonnes. Thereafter, it doubled in the next 10 years, and then it is doubling again, maybe over a slightly longer span. Steel Production in India expected to reach 124 million tons by 2012 and 275 million tons by 2020 which could make her second largest steel maker.

In the developed countries, the trend is on consolidation of industry. Cross-border mergers have been taking place for several years. The focus is on technological improvements and new products.

Globally, the steel industry became a billion tonne industry in 2004. How much more it will grow will depend primarily on how much more steel is consumed in the developing countries.

Reduction in workforce

Steel is no more the labour-intensive industry it used to be. Earlier, it was often associated with the image of huge work force living in a captive township. All that has changed dramatically. A modern steel plant employs very few people. In South Korea, Posco employs 10,000 people to produce 28 million tonnes. As a thumb rule, one can put the direct employment potential at 1,000 per million tonnes. It could be less. However, steel being a basic industry, it generates substantial growth of both upstream and downstream facilities. According to some estimates one person-year of employment in the steel industry generates 3.5 person-years of employment elsewhere. Considering all these, total employment generation will be substantial.

The third quarter of the twentieth century witnessed massive growth of the global steel industry. Annual production rose more than three times in 15 years from 1960. In the last quarter of the century, production reached a plateau, rising only by around 100 million tonnes. Increase in production gave way to increases in productivity.

During the period 1974 to 1999, the steel industry had drastically reduced manpower all around the world. In USA, it was down from 521,000 to 153,000. In Japan, it was down from 459,000 to 208,000. In Germany, it was down from 232,000 to 78,000. In UK, it was down from 197,000 to 31,000. In Brazil, it was down from 118,000 to 59,000. In South Africa, it was down from 100,000 to 54,000. South Korea already had a low figure. It was only 58,000 in 1999. The steel industry had reduced manpower around the world by more than 1,500,000 in 25 years.

Employment in the steel industry 1974, 1990 and 1996-2000

Thousand at end of year

{| class="wikitable" |- ! Country ! 1974 ! 1990 ! 1996 ! 1997 ! 1998 ! 1999 ! 2000 |- ! Austria ! 44 ! 21 ! 13 ! 12 ! 12 ! 12 ! 12 |- ! Belgium ! 64 ! 26 ! 23 ! 21 ! 20 ! 20 ! 20 |- ! Denmark ! 2 ! 1 ! 1 ! 1 ! 1 ! 1 ! 1 |- ! Finland ! 12 ! 10 ! 7 ! 7 ! 8 ! 7 ! 8 |- ! France ! 158 ! 46 ! 39 ! 38 ! 38 ! 38 ! 39 |- ! FR Germany (1) ! 232 ! 125 ! 86 ! 82 ! 80 ! 78 ! 77 |- ! Greece ! 0 ! 3 ! 2 ! 2 ! 2 ! 2 ! 2 |- ! Ireland ! 1 ! 1 ! 0 ! 0 ! 0 ! 0 ! 0 |- ! Italy ! 96 ! 56 ! 39 ! 37 ! 39 ! 39 ! 39 |- ! Luxembourg ! 23 ! 9 ! 5 ! 5 ! 4 ! 4 ! 4 |- ! Netherlands ! 25 ! 17 ! 12 ! 12 ! 12 ! 12 ! 12 |- ! Portugal ! 4 ! 4 ! 2 ! 2 ! 2 ! 2 ! 2 |- ! Spain ! 89 ! 36 ! 24 ! 23 ! 22 ! 22 ! 22 |- ! Sweden ! 50 ! 26 ! 14 ! 14 ! 14 ! 13 ! 13 |- ! United Kingdom ! 197 ! 51 ! 37 ! 36 ! 34 ! 31 ! 29 |- ! European Union ! 996 ! 434 ! 306 ! 293 ! 290 ! 280 ! 278 |- ! Yugoslavia (2) ! 42 ! 69 ! 17 ! 17 ! 17 ! 15 ! 15E |- ! Canada ! 77 ! 53 ! 53 ! 53 ! 55 ! 57 ! 56 |- ! United States ! 521 ! 204 ! 167 ! 163 ! 160 ! 153 ! 151 |- ! Brazil ! 118 ! 115 ! 79 ! 74 ! 63 ! 59 ! 63 |- ! South Africa ! 100 ! 112 ! 71 ! 70 ! 61 ! 54 ! 56 |- ! Japan ! 459 ! 305 ! 240 ! 230 ! 221 ! 208 ! 197 |- ! Republic of Korea ! n/a ! 67 ! 66 ! 64 ! 59 ! 58 ! 57 |- ! Australia ! 42 ! 30 ! 21 ! 20 ! 20 ! 24 ! 21E |- ! Total of above ! 2335 ! 1388 ! 1019 ! 985 ! 946 ! 908 ! 885 |- (1) Includes former German Democratic Republic 1996-2000 (2) Serbia and Montenegro 1996-2000

Totals are rounded. United States figures are average for 12 months. Various other differences in coverage and definition exist, so that inter-country comparisons are of dubious value. E indicates estimate.
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References

Appendices

Both appendices are from IISI material, earlier on the web but now replaced by more recent data.

See also

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